Case: Superior Industries, LLC v. Thor Global Enterprises Ltd., 27 Nov. 2012(Court of Appeals for the Federal Circuit)

The Federal Circuit Court of Appeals issued a decision that represents the "latest word" on how to sufficiently plead patent infringement in a complaint. Yet the latest word continues the puzzling dichotomy espoused by the Court as to pleading direct infringement in contrast to indirect infringement. Indirect infringement encompasses inducement to infringe and contributory infringement.

The Court in Thor Global reiterated, now through Chief Judge Rader, that for direct infringement, the complaint need only (generally) set out the basics of the infringement as per model Form 18, which is part of the Federal Rules of Civil Procedure. The Form only requires some very cursory facts of: jurisdiction, that the plaintiff owns a patent; that the defendant is likely infringing it; that the defendant has been put on notice it is infringing; and that the plaintiff seeks some judicial relief. Form 18 does not require the Complaint to discuss which specific claims of the patent are being infringed, nor describe in detail the accused infringing device, nor explain any infringement theory.

The Federal Circuit has received sharp criticism for its "Form 18 over substance" approach to pleading direct infringement. This is because it appears to be in direct violation of recent Supreme Court authority in Twombly/Iqbal on modern pleading requirements. Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). Yet the Federal Circuit simply says if that’s the Form, then that must be OK.

Not so for indirect infringement. There is no "Form" to which to defer, so the Federal Circuit then actually applies the current law on pleading. For indirect infringement, because it is based, in part, on the "state of the culpable mind" of the defendant, and issues of non-infringing uses (for contributory) among other factual questions, the bare-bones pleading of Form 18 would not suffice. The Court in Thor Global asserted that the sufficiency requirements are not symmetric as between direct and indirect infringement pleading. Indirect infringement requires more details. Relying on past precedent in McZeal v. Sprint Nextel Corp., 501 F.3d 1354 (Fed. Cir. 2007) and In Re Bill of Lading Transmission (R+L Carriers v. Driver Tech), 681 F.3d 1323 (Fed. Cir. 2002), the Court reaffirmed that the asymmetry exists. Indirect infringement requires "something more", and this "something more" is akin to Twombly/Iqbal-like pleading, where pleadings require facts supporting a plausible claim versus mere possibility that the claim may exist.

What then should the patentee plead for indirect infringement? Plainly it is most prudent for the patentee to plead the facts of "who, what, where, when, and how" the defendant indirectly infringes. The patentee may wish to point out the specific direct infringer, but certainly should plead the activities surrounding the indirect infringement in as much detail as possible. These activities may include advertisements, marketing materials, industry statements, investor and financial statements, instructions or manuals, etc. Indeed tightly drafted allegations in the complaint may result in admissions in the responsive pleading, thus either narrowing the scope of litigation later or accelerating summary disposition motions.

At least where contributory infringement is to be alleged, some detail on the elements of non-staple article of commerce and lack of any substantial non-infringing use would be advisable. Enough detail from which a plausible inference can be drawn that the necessary specific intent is present would likewise be most advisable. Such detail may not ordinarily be available to the patentee at the time of filing, particularly those details bearing upon the defendant’s state of mind; those details reside particularly with the defendant, and may be revealed only in discovery as the action progresses. Thus the patentee may be faced with a difficult decision at the outset: do I plead indirect infringement on a limited factual basis, or hope to add a count later when the supportive facts come out? The latter may not be an option, if the window for amending has closed, or the court does not allow a discretionary amendment. Thor Global also highlights the danger of inadequate pleading, perhaps relying on an ability to amend later: the indirect infringement counts were dismissed with prejudice by the district court, and that was later affirmed by the Federal Circuit, even with the case remanded as to the direct infringement count.